I recently returned to online publishing after leaving the industry in 2004. It’s been fun getting back in the game at RollUp Media, a new media publishing startup. But what a brave new world it is in online advertising.
Sure, I followed developments from the sidelines, religiously reading paidContent, GigaOM and following Jason Hirschhorn’s curated feed, Media ReDEFined. But there have been many Rip van Winkle moments when I can hardly recognize the landscape. Agency trading desks, RTB, DSPs, SSPs, last-click attribution, third-party data, DMPs, retargeting … there is a pea soup of acronyms and lingo to learn, not to mention entire new categories of technologies and players in the new value chain of online advertising, and then there’s mobile, video and social, too! (This video from the Internet Advertising Bureau, U.K. gives a good summary of what happened, as does this one from MediaMath and Improve Digital.)
The ability to precisely target users and immediately measure response rates has resulted in the programmatic buying and selling of online display inventory, not unlike that of financial commodities. This commoditization of online advertising would seem to be a sea change in the way things were.
And yet, and yet. Despite all the changes, a lot has stayed the same:
- The industry is still debating the value and effectiveness of banner ads. This was a debate in 2004, and it continues today. Banner ads are reviled in many quarters, but they’ve shown remarkable resilience.
- Nielsen and comScore are still the two main measurement agencies providing the currency on which display is bought and sold. Publishers continue to be dissatisfied with both, but new players, such as Quantcast, haven’t made much of a dent. This isn’t a big surprise. The market for third-party media measurement tends towards a duopoly or winner-take-all (Nielsen, Arbitron, ABCe).
- There are still discrepancies between agency and publisher ad servers. There are less discrepancies today than in 2004, but they’re still there. Low discrepancy is actually used as a selling point by ad servers now.
- Mobile is still the next big thing. To be fair, mobile went from nominal to $1.6 billion in 2011. But it can grow much, much bigger if a company can figure out the best way to monetize mobile attention. Banner ads on mobile sites aren’t it.
- The industry is still concentrated. The top 50 online ad sellers accounted for 94 percent of total revenues in 2004 compared to 90 percent last year. Many of the players are different this time around, but it continues to be about scale.
- Publishers and agencies are still doing dodgy things, whether it’s running fake pre-rolls or stealing publishers’ user data. The surprise here is that there hasn’t been more of an outcry against these practices.
I recently dug up Geoff Ramsey’s November 2004 eMarketer report, “The State of the Online Advertising Industry.” At that time, eMarketer was forecasting the U.S. online market to be $9.4 billion that year, up from $7.3 billion the previous year, and predicting torrid growth in the years ahead, reaching $17.5 billion in 2008. The factors driving such growth? The report listed the following reasons:
1. The consumer is in control
2. The Internet delivers on the corporate mandate for marketers to be more accountable
3. The economy continues to plug along with reasonable growth
4. Broadband is changing the consumer Internet landscape
5. The crack in the foundation of the $60 billion television industry is widening
6. Search continues to evolve and draw more dollars
7. With increasing numbers of Americans shopping and buying online, marketers have greater opportunities to reach consumers who are interested in a given category
Sound familiar? Those factors wouldn’t look out of place in any year in the past decade. I’ll highlight the most promising trends of the moment in a future post. For now, it’s no surprise that, notwithstanding the new tools and technologies at our disposal, publishers are still trying to maximize the value of their audiences while advertisers and agencies are trying to reach the right people with the right message in the most cost-effective way. The formats, tools and technologies may be different, as might the players involved, but clearly there are truisms that continue to hold, and we would be well-advised to remember them.
Oh, and the actual value of the U.S. online ad market in 2008? $23.4 billion, with last year clocking in at $31.7 billion. That’s torrid growth for sure. Actually, online advertising as a category is starting to become meaningless. It’s like measuring a paper-based advertising category made up of yellow pages, newspapers, magazines and other pulp-driven formats. But somehow, I suspect we’ll still be measuring the growth of online ads in 2020.
Rags Gupta is managing director at RollUp Media, a publishing startup based in London. He is also on the board of Videoplaza. Previously, Gupta was part of the founding executive team at Brightcove. He started his career in digital media at Live365.